tdk corporation · in april 2004, tdk launched an initiativeaimed at generating new growth with the...

TDK Corporation1-13-1, NihonbashiChuo-ku, Tokyo103-8272 Japan

Contacts;

TDK Corporation(Tokyo) Corporate Communications DepartmentMichinori Katayama +81(3)5201-7102

TDK U.S.A. Corporation Francis J. Sweeney +1(516)535-2600

TDK Marketing Europe GmbH Marco Donadoni +49(2102)4870

FOR IMMEDIATE RELEASETOKYO - April 27, 2005 TDK Corporation today announced its Consolidated business resultsprepared in conformity with accounting principles generally accepted in the United States ofAmerica (the "U.S. GAAP") for fiscal year ("FY") 2005 and Non-Consolidated business resultsfor FY 2005.

I. ConsolidatedI-1) SummaryConsolidated results (April 1, 2004 - March 31, 2005)

Term

Item % % Change(%)Net salesOperating incomeIncome from

continuing operationsbefore income taxes

Income fromcontinuing operations

Net incomePer common share :

Net income / BasicNet income / Diluted

Note:

(Sales breakdown)Term

Product % % Change(%)Electronic materials

and componentsElectronic materialsElectronic devicesRecording devicesSemiconductors

& others Recording media

& systemsTotal salesOverseas sales

Note: U.S.$1=Yen 107

13.4

6,360

519,792 79.3 25,422

FY2004

42,863 6.5 5,750

11.4

19,449

112,639

62,072 9.4

234,578116,387174,800

FY2005

26.6

(April 1, 2004 - March 31, 2005)

6.8

Yen 317.69

(Yen millions) (Yen millions)2,0613,320

2,847

55,712

100.0

-2.70.3

(13,341)

(23,361) -17.2

2,061

1.94,473

4,579 30.8

74.3

2.9

17.1

181,766

1,052,701

14,870

136,000 20.7

2.3

100.0

(U.S.$ thousands)

82.9 5,095,458545,214

(Yen millions)

17.7

5.9

FY2004(April 1, 2003 - March 31, 2004)

9.1 559,1596,148,159 0.3

Change

U.S.$ 3.17

(U.S.$ thousands)

FY2005(April 1, 2004 - March 31, 2005)

(Yen millions)

8.6

Yen 317.80

42,101

655,79256,510

6.4

8.5

657,853473,828

655,792487,1694,428,299

6,148,159100.072.0

7.8

Change

8,388

(Yen millions)

7,982 4.8

4.9

166,818107,999

(April 1, 2003 - March 31, 2004)

657,853

420,075

59,830

6.844,948

580,112

48,613

100.0

Yen 339.55Yen 339.76 U.S.$ 3.18

7.4 454,327

As a result of the sale of a subsidiary in semiconductors & others product, the operating results of thediscontinued operation is presented as a separate line item in the consolidated statements of income inaccordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairmentor Disposal of Long-Lived Assets. Correspondence figures for the previous fiscal year have been reclassed toconform to the presentation used for the year ended March 31, 2005.

25.416.535.12,192,318

1,087,7291,633,645

35.7

(Yen millions)

230,105

1

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I-2) Management Policies (1) Fundamental Management Policy TDK was established in 1935 as the world’s first company to commercialize a magnetic material called ferrite. In the ensuing years, TDK has developed and commercialized electronic materials, electronic devices, recording devices and recording media, among other products. This drive has been based on the company’s founding spirit: “Contribute to culture and industry through creativity.” To preserve its identity as a dynamic company, TDK is dedicated to creating value for all stakeholders, including shareholders, customers, suppliers, employees and society, by drawing on innovative thinking and a willingness to tackle new challenges. TDK firmly believes that it must remain an organization that is a constant source of exciting ideas that are of true value to stakeholders. (2) Fundamental Policy for Distribution of Earnings Returning earnings to shareholders is one of TDK’s highest management priorities. Therefore, TDK’s fundamental policy is to give consideration to a consistent increase in dividends based on factors such as the return on equity (ROE), dividends as a percentage of equity (DOE) and the company’s results of operations on a consolidated basis. Retained earnings are used to make aggressive investments for growth, mainly in the development of new products and technologies in key fields so as to respond precisely to the rapid technological advances in the electronics industry. (3) Policy Regarding Reduction of TDK’s Share Trading Unit On August 1, 2000, TDK reduced the Unit Stock (tangen) of its common shares from 1,000 to 100 shares. This action led to an increase in the number of individual shareholders and TDK’s subsequent selection for an award from Tokyo Stock Exchange for this achievement in the year ended March 31, 2004. TDK believes that its shares now have sufficient liquidity. However, TDK will consider a further reduction of the trading unit based on its stock price and market needs as well as on a cost-benefit analysis. (4) Medium- and Long-Term Management Strategy In April 2004, TDK launched an initiative aimed at generating new growth with the overriding aim of becoming an exciting company, an ongoing theme at TDK. The electronics industry, to which TDK belongs, is becoming extremely competitive as the advent of a full-fledged digital age shortens product lifespans. To achieve growth in the future in this operating environment, TDK must deliver new products that the market demands, without delay, precisely when those products are needed, while keeping a close eye on market movements. With this in mind, over the medium term, TDK will increase the share of sales of new products in consolidated net sales and execute various initiatives to drive growth. TDK is aiming for growth by delivering the value customers demand in a timely manner through the development of products rooted in the company’s core materials, process and evaluation & simulation technologies, which underpin its core electronic materials and components business.

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Strengthening its operations in this way is thus an important theme at TDK. TDK is also reaffirming the importance of coexisting with society as a responsible corporate citizen by conducting its own social activities based on two key corporate philosophies: “Creativity” and “Culture.” Furthermore, TDK will comply with the U.S. Sarbanes-Oxley Act of 2002 and all other applicable laws and regulations as it strengthens corporate governance. (5) Pressing Issues From a medium-term perspective, the electronics industry, TDK’s field of operations, is expected to see the growth of digital home appliances, the convergence of information and communications, as typified by the increasingly diverse functions offered by mobile phones, and the greater use of electronics in motor vehicles. These trends are expected to result in continued expansion in demand for the electronic components that TDK develops, manufactures and sells. At the same time, however, in the dynamically changing electronics industry, a faster response than ever before will be required by the company’s electronic components business. TDK has continuously reformed and improved the structure of its businesses, but it believes that responding to the changes in the electronics industry requires making this process of reform and improvement an ongoing drive. Furthermore, in the digital era of the electronics industry, falling prices due to stiffer competition with new products, greater inventory risk and other challenges are unavoidable. Nevertheless, TDK is determined to be a company that can surmount these challenges and grow. And, to remain an attractive and exciting company, TDK aims to grow by creating greater value. In this vein, TDK will refine its core technologies (materials, process and evaluation & simulation technologies) while honing in on three key fields that it believes harbor prospects for growth: IT home electronics; high-speed, large-capacity networks; and car electronics. Increasing the company’s ability to generate earnings by supplying products and technologies imbuing value that these markets demand on a timely basis is a key issue. Moreover, TDK will take on the challenge of advancing along a growth trajectory while making investments that are prudent yet aggressive. (6) Basic Stance on and Strategy to Improve Corporate Governance Companies must conduct their activities and manage their operations in a fair, impartial and transparent manner, abiding by laws and regulations, and with the recognition that their existence is supported by shareholders, customers, suppliers, employees and society. TDK has put in place various internal control systems with this fundamental recognition in mind. It has also implemented a number of other measures in the same vein, such as appointing an outside director and outside statutory auditors; involving people outside the company in setting directors’ remuneration; and building a corporate ethics system, in which reports are submitted directly to the Board of Directors, that includes education and diffusion programs and other activities.

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(6-1) Management structure and other corporate governance systems concerning decision-making, strategy execution and supervision In consideration of the size of the company, the streamlining of management, the speed of decision-making and other factors, TDK has adopted the corporate auditor system within the meaning of the Commercial Code of Japan; three of its five corporate auditors come from outside the company. Furthermore, one of TDK’s seven directors is an outside director. Moreover, having introduced the post of corporate officer, TDK has clearly demarcated responsibilities: directors are responsible for decision-making and oversight, while corporate officers have responsibility for executing day-to-day operations. Corporate officers execute policies set by the Board of Directors in their respective areas of responsibility. Two full-time corporate auditors, three part-time corporate auditors and two staff members perform audits. The auditors examine the performance of directors mainly from the perspective of legality by inspecting departments, examining important documents and attending important meetings. Collaboration among corporate auditors involves submitting reports and holding discussions at monthly meetings of the Board of Corporate Auditors. The 8-member Management Review & Support Dept., an internal audit organization that reports to the CEO of TDK, carries our periodic audits and offers support from the perspective of the consistency of business execution and management policy and the rationality of management efficiency. In the fiscal year ended March 31, 2005, the department made preparations to comply with the U.S. Sarbanes-Oxley Act of 2002, which requires companies to undertake self-evaluations of the establishment and operation of internal control systems. Two certified public accountants, Seiichi Sasa and Hideaki Koyama, who belong to the independent registered public accounting firm KPMG AZSA & Co., conduct financial audits of the company. Mr. Sasa has been involved with these audits for two years and Mr. Koyama for four years. Twelve accountants, seven assistant accountants and eight other staff also assist in these audits. Regarding collaboration among the corporate auditors, Management Review & Support Dept. and independent auditors, these parties exchange information and hold discussions at meetings held three times a year with respect to problems found during audits for the purpose of making improvements. The Board of Corporate Auditors receives audit reports twice a year (interim and year-end) from the independent auditors and discusses these reports as well as evaluates the audits of the independent auditors. To ensure the transparency of directors’ remuneration, TDK has introduced bonuses linked to the company’s results and, at the same time, has the outside director serve as chairperson of the Compensation Advisory Committee. Moreover, to ensure corporate ethical standards are upheld, a Corporate Ethics Committee was established at TDK and ethics councils were formed at domestic and overseas subsidiaries. These actions are part of ongoing efforts to build a global corporate ethics management framework that also encompasses domestic and overseas subsidiaries. To monitor the state of compliance with corporate ethical standards, a “helpline” has been established, creating an internal system that encourages employees to report matters involving corporate ethics and to offer suggestions.

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The Compensation Advisory Committee and Corporate Ethics Committee report directly to the Board of Directors. Another defining aspect of TDK’s corporate governance system is the ability to receive advice and directives from outside legal counsel regarding risks associated with TDK’s corporate activities. Moreover, to give the company the best managerial structure for responding flexibly to the various changes in its operating environment, and to build greater trust with shareholders, the company has set the terms of directors to one year.

In the fiscal year ended March 31, 2005, the directors and corporate auditors were paid remuneration of ¥194 million and ¥59 million, respectively. The total amount paid to directors and corporate auditors was thus ¥254 million. Furthermore, bonuses totaling ¥103 million were paid to TDK directors. The amount of remuneration related to audit certification of the parent company that was paid to independent auditors KPMG AZSA & Co. was ¥94 million. (6-2) Personal, financial and trading relationships between the company and the outside director and outside corporate auditors, and other beneficial relationships There are no personal or financial relationships between TDK and the outside director or the three outside corporate auditors. (6-3) Measures taken to enhance corporate governance over the past year To ensure that corporate ethical standards are being upheld, TDK has put in place a global corporate ethics framework that encompasses the activities of overseas as well as domestic subsidiaries. Activities are ongoing to oversee and refine this system. Because TDK is listed on the New York Stock Exchange, it is subject to the U.S. Sarbanes-Oxley Act of 2002, an extremely strict law relating to corporate governance that was prompted by a series of scandals involving U.S. companies. To comply with this law, a project team that includes outside experts is undertaking a fundamental review of and rebuilding corporate systems, including those of subsidiaries. At the same time, TDK continues to identify and take countermeasures against risk factors associated with its business activities. In addition, TDK restricts the work that is outsourced to independent auditors so as to preserve their impartiality and independence.

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I-3) Business Results and Financial Position 1. Summary Consolidated results for fiscal 2005, ended March 31, 2005, were as follows. In the electronics industry in the first half of fiscal 2005, demand for digital home appliances, such as LCD and plasma flat-screen TVs and DVD recorders, was boosted by the Summer Olympic Games in Athens, and other events. This resulted in strong demand for the TDK Group’s electronic components in the first half. However, demand for these components began to cool in the second half in line with production cutbacks of finished products that use them. In this business environment, TDK continued to implement profit structure reforms. TDK also actively made investments to drive growth, such as by ramping up production capacity of capacitors and forging a strategic alliance regarding HDD heads. As a result, TDK posted consolidated net sales of ¥657,853 million (U.S.$6,148,159 thousand), up 0.3% from ¥655,792 million. Operating income rose 5.9%, from ¥56,510 million to ¥59,830 million (U.S.$559,159 thousand). Income from continuing operations before income taxes increased 11.4%, from ¥55,712 million to ¥62,072 million (U.S.$580,112 thousand). Net income rose 6.8%, from ¥42,101 million to ¥44,948 million (U.S.$420,075 thousand). Basic net income per common share was ¥339.76 (U.S.$3.18), up from ¥317.80. During the year, the average exchange rate was ¥107.55 for the U.S. dollar and ¥135.17 for the euro, representing a 5.0% appreciation in the yen’s value against the U.S. dollar and a 1.9% decline against the euro. Overall, exchange rate movements had the effect of lowering net sales by approximately ¥20.6 billion and operating income by approximately ¥4.0 billion. (Sales by Segment) TDK’s businesses are broadly classified into two business segments: the electronic materials and components segment and the recording media & systems segment. (1) Electronic materials and components segment This segment is made up of four product sectors: (1-1) electronic materials, (1-2) electronic devices, (1-3) recording devices, and (1-4) semiconductors & others. Segment net sales increased 4.9%, from ¥519,792 million to ¥545,214 million (U.S.$5,095,458 thousand). Segment operating income rose 15.0%, from ¥58,715 million to ¥67,520 million (U.S.$631,028 thousand). Looking at electronic materials and electronic devices, demand for components was strong in the fiscal year’s first half on the back of higher demand for digital home appliances driven by the Athens Summer Olympic Games. However, the second half saw sales prices of components drop as demand cooled due to inventory cutbacks of digital home appliances. The overall result, however, was a year-on-year increase in sales of both electronic materials and electronic devices.

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In recording devices, HDD demand was lackluster in the first half of fiscal 2005 due to inventory cutbacks by customers following strong HDD demand in the second half of the previous fiscal year. Demand for HDD heads also picked up in the second half of fiscal 2005 once this adjustment phase ended. The result was a year-on-year increase in sales of recording devices. Sector results were as follows. (1-1) Electronic materials This sector is broken down into two product categories: capacitors, and ferrite cores and magnets. Sales in the electronic materials sector rose 4.8%, from ¥166,818 million to ¥174,800 million (U.S.$1,633,645 thousand). (Capacitors) Sales rose year on year. Sales of multilayer chip capacitors, the main product in the capacitors sector, were strong in the first half, as previously mentioned. In the second half, amid lackluster demand, TDK was able to absorb sales price declines and the effect of forex movements by improving the sales mix. These factors led to higher year-on-year sales. (Ferrite cores and magnets) Sales of ferrite cores and magnets increased year on year. In ferrite cores, sales declined from the previous fiscal year despite higher demand for general-purpose power supply cores for digital home appliances and cores for communications equipment. This decrease was due to a reduction in output of deflection yoke cores and flyback transformers cores used in CRT TVs. However, sales of magnets increased year on year, the result of steadily rising demand for use in automotive and HDD applications. The net result was a year-on-year increase in sales of ferrite cores and magnets as a whole. (1-2) Electronic devices This sector has three product categories: inductive devices, high-frequency components and other products. Sales in the electronic devices sector rose 7.8%, from ¥107,999 million to ¥116,387 million (U.S.$1,087,729 thousand). (Inductive devices) Sales increased year on year. Inductive devices, the largest product category in the electronic devices sector, posted higher sales despite lower sales prices and the negative effect of forex movements. The increase was attributable to higher demand spurred by acceleration in the pace at which automobiles are incorporating electronics and the increasing sophistication of mobile phones, as well as new product launches. (High-frequency components) Sales of high-frequency components declined marginally year on year because higher sales volume and an improved product mix failed to completely offset persistently strong discounting pressure from mobile phone handset manufacturers, the main customer for these components. (Other products) Sales of other products rose year on year. In power systems, sales of DC-DC converters and DC-AC inverters were healthy. Sensors and actuators recorded higher sales due to growth in demand for use in PCs and peripherals and communications equipment. As a result of this, overall sales of other products were higher than in the previous fiscal year.

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(1-3) Recording devices This sector has two product categories: HDD heads and other heads. Sector sales increased 1.9%, from ¥230,105 million to ¥234,578 million (U.S.$2,192,318 thousand). (HDD heads) Sales increased year on year. In HDD heads, the main product in this sector, TDK had to overcome the loss of business from a major customer that started producing heads in house in 2004, as well as the impact of falling sales prices and unfavorable forex movements. Cutbacks in HDD inventories at customers in the first half of the year also shaped the market. However, demand for HDD heads rose in the second half of the fiscal year following the end of these cutbacks, leading to higher year-on-year sales. (Other heads) Sales of other heads declined year on year, due to sluggish sales of optical pickups. (1-4) Semiconductors & others Sector sales climbed 30.8%, from ¥14,870 million to ¥19,449 million (U.S.$181,766 thousand). TDK recorded slightly higher sales of anechoic chambers for electromagnetic noise control and growth in external sales of manufacturing equipment due to higher investments in semiconductor facilities and equipment by customers. (2) Recording media & systems segment This segment is made up of four product categories: audiotapes, videotapes, optical media and other products. Segment sales declined 17.2%, from ¥136,000 million to ¥112,639 million (U.S.$1,052,701 thousand). The segment recorded an operating loss of ¥7,690 million (U.S.$71,869 thousand), an increase of 248.8% from last year’s operating loss of ¥2,205 million. (Audiotapes and videotapes) Sales of audiotapes and videotapes declined year on year. While TDK maintained a high market share, demand is declining for these products as a whole. (Optical media) Sales of optical media increased, with higher DVD sales volumes offsetting a sharp fall in prices of DVDs and lower CD-R sales. (Other products) Sales of other products decreased year on year. There was an increase in sales of LTO-standard* (Linear Tape-Open) tape-based data storage media for computers. However, a decline in sales caused by the sale in the previous fiscal year of a U.S. software development subsidiary and lower sales of recording equipment brought overall sales of other products down year on year. *Linear Tape-Open, LTO, LTO logo, Ultrium and Ultrium logo are trademarks of HP, IBM and Certance LLC in the U.S., other countries or both. (Sales by Region) Detailed geographic segment information can be found in the segment information on page 18 of the consolidated results. By region, in Japan, sales in the electronic devices sector and recording media & systems segment declined, while higher sales were recorded in the electronic materials, recording devices and semiconductors & others sectors.

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In the Americas, sales decreased in the electronic materials and recording devices sectors as well as the recording media & systems segment. The higher yen versus the U.S. dollar also impacted sales in the Americas. In Europe, lower sales were recorded in the electronic materials and semiconductors & others sectors as well as the recording media & systems segment. In Asia (excluding Japan) and other areas, sales declined in the recording devices sector and recording media & systems segment, but sales increased in the electronic materials and electronic devices sectors. The overall result was a 2.7% decrease in overseas sales year on year, from ¥487,169 million to ¥473,828 million (U.S.$4,428,299 thousand). Overseas sales accounted for 72.0% of consolidated net sales, a 2.3 percentage point decrease from 74.3% one year earlier. On a parent-company basis, net sales increased 3.9%, from ¥316,050 million to ¥328,452 million (U.S.$3,069,644 thousand). Operating income increased 392.8%, from ¥1,756 million to ¥8,653 million (U.S.$80,869 thousand). Current income rose 197.3%, from ¥10,277 million to ¥30,550 million (U.S.$285,514 thousand). Net income increased 786.3%, from ¥4,458 million to ¥39,513 million (U.S.$369,280 thousand). Basic net income per common share was ¥297.93 (U.S.$2.78), compared with ¥32.87 a year earlier. TDK plans to pay a year-end dividend of ¥40 per common share. Together with the interim dividend of ¥30 per common share paid in December 2004, the planned dividend per common share applicable to the year will be ¥70. 2. Financial Position (2-1) The following table summarizes TDK’s consolidated balance sheet at March 31, 2005. Total assets ¥790,020 million (2.6% increase) Total stockholders’ equity ¥650,715 million (12.9% increase) Equity ratio 82.4% (7.6 percentage point increase) At the end of the year, cash and cash equivalents were ¥24,353 million higher than on March 31, 2004. Net trade receivables were ¥9,668 million higher and net property, plant and equipment rose ¥8,024 million. However, other assets decreased ¥27,158 million. As a result of the above items and other changes, total assets increased ¥19,701 million. Total liabilities decreased ¥56,681 million. Trade payables and income taxes payable increased ¥2,175 million and ¥3,978 million, respectively, while retirement and severance benefits declined ¥62,351 million following the transfer of the substitutional portion of Employees’ Pension Fund (EPF) liabilities to the government. Total stockholders’ equity increased ¥74,496 million due to a ¥36,449 million increase in retained earnings and a ¥38,730 million decrease in accumulated other comprehensive loss.

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(2-2) Cash Flows (¥ millions)

Fiscal 2005 Fiscal 2004 Change Net cash provided by operating activities 93,582 113,820 (20,238) Net cash used in investing activities (60,863) (37,647) (23,216) Net cash used in financing activities (9,458) (9,661) 203 Net cash provided by (used in) discontinued operations

(1,625) 761 (2,386)

Effect of exchange rate changes on cash and cash equivalents

2,717 (10,669) 13,386

Net increase in cash and cash equivalents 24,353 56,604 (32,251) Cash and cash equivalents at beginning of period

227,155 170,551 56,604

Cash and cash equivalents at end of period

251,508 227,155 24,353

Operating activities provided net cash of ¥93,582 million (U.S.$874,598 thousand), a year-on-year decrease of ¥20,238 million. Net income rose ¥2,847 million to ¥44,948 million (U.S.$420,075 thousand) and depreciation and amortization increased ¥2,080 million to ¥52,806 million (U.S.$493,514 thousand). In changes in assets and liabilities, inventories decreased ¥11,329 million, trade payables decreased ¥7,955 million, accrued expenses decreased ¥12,718 million, income taxes payables, net decreased ¥1,856 million and retirement and severance benefits decreased ¥6,766 million. Investing activities used net cash of ¥60,863 million (U.S.$568,813 thousand), ¥23,216 million more than a year earlier. This mainly reflected a ¥16,534 million increase to ¥61,005 million (U.S.$570,140 thousand) in capital expenditures and a ¥2,423 million increase to ¥2,424 million in payments for purchase of investments in securities. Financing activities used net cash of ¥9,458 million (U.S.$88,393 thousand), ¥203 million less than a year earlier. The main outflow was ¥7,938 million for dividends paid.

(2-3) Trends in Cash Flow Indicators

FY2001 FY2002 FY2003 FY2004 FY2005 Stockholders’ equity ratio (%) 77.8 77.9 74.1 74.8 82.4 Capital adequacy ratio on a market value basis (%)

133.8 121.7 80.4 136.7 122.87

No. of years to redeem debt 0.10 0.07 0.02 0.00 0.00 Interest coverage ratio (times) 138.0 32.8 180.9 352.4 288.83

[Notes] Stockholders’ equity ratio = Total stockholders’ equity / Total assets Capital adequacy ratio on a market value basis = Market capitalization (*1) / Total assets (*1) Market capitalization = Closing price of TDK’s common shares on the Tokyo Stock Exchange on March 31, 2005 x Shares issued and outstanding at year-end after deducting treasury stock

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No. of years to redeem debt = Interest-bearing liabilities (*2) / Cash flows from operating activities (*3) (*2) Interest-bearing liabilities: The balance of “short-term debt” and “long-term debt” included in “long-term debt, excluding current installments” on the consolidated balances sheets. (*3) Cash flows from operating activities: “Net cash provided by operating activities” on the consolidated statements of cash flows. Interest coverage ratio = Cash flows from operating activities / Interest payments (*4) (*4) Interest payments: “Interest expense” on the consolidated statements of income

3. Business Risks With development, production and sales bases in countries around the world, the TDK Group is engaged in global business activities. Furthermore, the electronics industry, the main field of operations of the TDK Group, is seeing dramatic technological innovation and changes in market prices, resulting in intense competition in new product development and efforts to win customers. Because of these and other factors, the TDK Group is subject to various business risks that include, but are not limited to, changes in demand and foreign exchange rates caused by world economic trends; unpredictable events in conducting business overseas; more intense competition in the development of new products in line with rapid technological innovation; the ability to respond to intense price competition and diversifying demands from customers; the ability to acquire intellectual property rights; the ability to procure raw materials and other products; increasingly stringent environmental regulations internationally, and unavoidable natural disasters. 4. Fiscal 2006 Projections TDK’s consolidated and non-consolidated projections for fiscal 2006, the year ending March 31, 2006, are as follows. [Consolidated Projections for Fiscal 2006]

Year ending March 2006 (¥ millions)

% change from FY05

Year ended March 2005 (¥ millions)

Net sales 690,000 4.9 657,853 Operating income 67,000 12.0 59,830 Income before income taxes

69,000 11.2 62,072

Net income 50,000 11.2 44,948 [Non-Consolidated Projections]

Year ending March 2006 (¥ millions)

% change from FY05

Year ended March 2005 (¥ millions)

Net sales 334,900 2.0 328,452 Operating income 17,300 99.9 8,653 Current income 39,800 30.3 30,550 Net income 27,000 -31.7 39,513

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Note: The projections are based principally on the following assumptions: · An average yen-U.S. dollar exchange rate of ¥100 for the full year. · There is expected to be a weak recovery generally in demand for passive

components (electronic materials and electronic devices) in the first half of fiscal 2006. However, with current inventories of finished products estimated to be at generally suitable levels, in the second half of fiscal 2006, there is expected to be an increase in production of finished products in line with growth in demand at the end of 2005. This increase is expected to also lead to higher demand for components in the second half of the fiscal year.

· Sales of recording devices are expected to increase in fiscal 2006, continuing on from the previous fiscal year. With the base of demand widening for HDDs, double-digit annual growth is expected to continue in fiscal 2006. Furthermore, the growth in demand for HDDs for video recorders and other consumer product applications is also expected to boost demand for HDD heads, supporting sales of these products.

· Lower sales are forecast in the recording media & systems segment. Sales of audiotapes and videotapes are expected to decline in line with falling demand. While sales of optical media products and tape-based data storage media for computers are forecast to increase, this growth is unlikely to fully offset the decline in sales of audiotapes and videotapes. In fiscal 2006, TDK plans to implement strategies to counter falling DVD sales prices, a factor behind the deterioration in earnings in fiscal 2005, as well as push ahead with ongoing structural reforms of production and sales divisions.

Cautionary Statement About Projections This earnings release contains forward-looking statements, including projections, plans, policies, management strategies, targets, schedules, understandings and evaluations, about TDK and its group companies that are not historical facts. These forward-looking statements are based on current forecasts, estimates, assumptions, plans, beliefs and evaluations in light of information available to management on the date of this earnings release. In preparing forecasts and estimates, TDK and its group companies have used, as their bases, certain assumptions as necessary, in addition to confirmed historical facts. However, due to their nature, there is no guarantee that these statements and assumptions will prove to be accurate in the future. TDK therefore wishes to caution readers that these statements, facts and certain assumptions contained in this earnings release are subject to a number of risks and uncertainties and may prove to be inaccurate. The electronics markets in which TDK and its group companies operate are highly susceptible to rapid changes. Furthermore, TDK and its group companies operate not only in Japan, but in many other countries. As such, factors that can have significant effects on its results include, but are not limited to, shifts in technology, demand, prices, competition, economic environments and foreign exchange rates. The premises and assumptions used in computing the projections in this earnings release include, but are not limited to, those explained above.

Consolidated

I-4) Statements of income

Term

Item

Net salesCost of sales

Gross profitSelling, general and administrative expenses

Subsidy from the governmentLoss on settlement

Operating income

Other income (deductions):Interest and dividend incomeInterest expenseForeign exchange gain (loss)Other-net

Total other income (deductions)

Income from continuingoperations before income taxes

Income taxes

Income from continuing operationsbefore minority interests

Minority interests

Income from continuing operations

Loss from discontinuedoperations, net of taxes

Net income

Notes:1. In accordance with SFAS No.144, "Accounting for the Impairment or Disposal of Long-Lived Assets",

the figures for the year ended March 31, 2004 relating to discontinued operations have been reclassifiedaccordingly.

2. U.S.$1=Yen 107

2,242

479

12,980

0.1

49,092 7.5

1.9

62,072 9.4

119,886 18.2 122,875 18.8

6.5

1,120,430 -2.4

Change

476,407

13.4

11.4

34,252

FY2004(April 1,2003 - March 31,2004)

(Yenmillions) %

6.8

(5,855)

-0.1

503

-

8.5

0.1

1.9

381.0 0.1

-3.3

33.4

-

3.9

13.6

6.442,101

121,308

42,863

762

6.6458,804

12,490

454,327

43,222

44,948

FY2005(April 1, 2004 - March 31, 2005)

% (U.S.$thousands)

(Yenmillions)

559,15959,830

1,730

26.4173,530

(856)

15,813(3,028)(8,000)

1,692(324)

9.1

(313,392)(33,533)

657,853484,323

100.073.6

100.072.627.4

655,792

179,385

6,148,1594,526,3831,621,776

16,168

255,579 27,347 -

(3,064)

1,189(323)

56,510 5.9

1,400(798)

(1)2,208

3303,040

490

55,712

Change(%)

3,320

(2,989)

2,061

(Yenmillions)

7,9160.31.7

(33,533)

20,953

420,075

4,477

580,112

2,847

120

6,360

5,750

2,903

-5.127,347 4.2

48,613 7.4

6.8

3,665 0.6

0.3

5,870

Transfer to the government of the substitutionalportion of Employees' Pension Fund:

- - - -

359

8.6

13

Consolidated

I-5) Balance sheets

Term

Item

Current assetsCash and cash equivalentsMarketable securitiesNet trade receivablesInventoriesOther current assets

Noncurrent assetsInvestments in securitiesNet property, plant and equipmentOther assets

Term

Item

Current liabilitiesShort-term debtTrade payablesAccrued expensesIncome taxes payablesOther current liabilities

Noncurrent liabilitiesLong-term debt,

excluding current installmentsRetirement and severance benefitsDeferred income taxesOther noncurrent liabilities

Minority interests

Common stockAdditional paid-in capitalLegal reserveRetained earningsAccumulated

other comprehensive income (loss)Treasury stock


Change

190,824

4,689

294,546

208,945

34,51824,353

77,301

75,606

74,496

- 421

Change

(2,377)1,667

4,317

(27,158)19,701

(14,817)

790,020

9.8

3,679(313)

2,175(2,898)

36,449

3,978737

Total liabilities

Total stockholders' equity

15,246

11,170

650,715 82.4TOTAL

As of March 31, 2005(Yen

millions)(U.S.$

thousands)%

118,897

757

104,392

81,000

10362,092

15.1 1,111,187

35.4


millions) %

22,698216,969

212,1312,027,748

2,614,290

32,641 305,056

115,218 15.0963 416

580,299 59,917

(7,443) (69,560)6,081,449

63,051 589,262

(482,776)

16,918597,205

(51,657)

100.0 7,383,364

0.4

(6,339)

158,112 16,4975,581,355 560,756

63,051

(90,387)

81

5,162 0.6 48,242

3,244 30,318

134,143 17.0 1,253,673

73,521215751 7,019

1,609147,999

279,729

27

398,467 45,534

5,399 50,458 4,6628,667

42,636

1.9 142,486

475,773

74,92434,251

510,291251,508

64.6

1,383,168700,224320,103

TOTAL 100.0 7,383,36440,062

790,020374,411

4,769,0742,350,542

15,037

As of March 31, 2004(U.S.$

thousands)(Yen

millions) %

8,024

100.0


millions)

227,155402

18,381

770,31967,220

ASSETS

LIABILITIES AND STOCKHOLDERS' EQUITY

(Yenmillions)

61.8

32,584

138,331 9,668

%

1,207

38.2

19,701

54

(62,351)

(Yenmillions)

(60,360)

38,730

1,886

-

536

(1,104)74.8

770,319 100.0576,219

1,843 1,401

32,641

24.8 (56,681)

3,276

14

Consolidated

I-6) Statements of stockholders' equity

Term

(April 1, 2003 -March 31, 2004)

Item

Common stock:Balance at beginning of periodBalance at end of period

Additional paid-in capital:Balance at beginning of periodBalance at end of period

Legal reserve:Balance at beginning of periodTransferred from retained earningsBalance at end of period

Retained earnings:Balance at beginning of periodNet incomeCash dividendsLosses on sales of treasury stockTransferred to legal reserveBalance at end of period

Accumulated other comprehensive income (loss):Balance at beginning of periodOther comprehensive income (loss)

for the period, net of taxBalance at end of period

Treasury stock:Balance at beginning of periodAcquisition of treasury stockExercise of stock optionBalance at end of period


Disclosure of comprehensive income (loss):Net income for the periodOther comprehensive income (loss)

for the period, net of taxTotal comprehensive income for the period


83,678 782,037 30,538

568 5,309 381

FY2005 FY2004

(April 1, 2004 - March 31, 2005)

(Yen millions) (U.S.$ thousands) (Yen millions)

(844,738)

(3,935)5,581,355

154,1773,935

158,112

597,205

361,962

361,962

(482,776)

(59,243)

6,081,449

(15,626)

(69,560)

5,240,710420,075(74,187)

(1,308)

32,641

63,051

42116,918

305,056305,056

589,262589,262

(90,387)

42,101(6,625)

(544)560,756

(95)

32,641

63,05163,051

15,953

(11,563)

(6,339)(1,672)

(7,443)

576,219

(4,855)(1,865)

(6,339)

420,075

38,730

44,948

32,641

16,497544

16,497

525,919

(78,824)

(11,563)

32,641

42,101

650,715

560,75644,948

63,051

(51,657)

(7,938)

(421)

38,730

(90,387)

(140)

15

Consolidated

I-7) Statements of cash flows

Term

Item

Cash flows from operating activities:Net incomeLoss from discontinued operations, net of taxIncome from continuing operationsAdjustments to reconcile net income to

net cash provided by operating activities:Depreciation and amortizationLoss on disposal of property and equipmentDeferred income taxesLoss (gain) on securities, netGain on sale of a subsidiary

Changes in assets and liabilities:Increase in trade receivablesDecrease (increase) in inventoriesIncrease in trade payablesIncrease (decrease) in accrued expensesIncrease (decrease) in income taxes payables, netIncrease in retirement and severance benefits

Other-netNet cash provided by operating activities

Cash flows from investing activities:Capital expendituresProceeds from sale and maturities of

investments in securitiesPayment for purchase of investments in securitiesPayment for purchase of other investmentsProceeds from sales of property, plant and equipmentAcquisition of minority interestsProceeds from sale of a subsidiaryOther-net

Net cash used in investing activities

Cash flows from financing activities:Proceeds from long-term debtRepayment of long-term debtIncrease (decrease) in short-term debt, netSale (purchase) of treasury stock, netDividends paid

Net cash used in financing activitiesNet cash provided by (used in) discontinued operations

Effect of exchange rate changeson cash and cash equivalents

Net increase in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of periodNotes:

1. In accordance with SFAS No.144, "Accounting for the Impairment or Disposal of Long-Lived Assets",the figures for the year ended March 31, 2004 relating to discontinued operations have been reclassifiedaccordingly.

2. U.S.$1=Yen 107

2,350,542

25,393

(15,187)

(74,187)(88,393)

227,5982,122,944

(11,626)

(568,813)

2,037

(1)

(1,533)(3,084)

69(479)

(1,047)

(22,654)

(7,680)

170,551

(391)

(7,868)8,200

5,7048,878

(442)

1,814

227,155

56,604

(1,579)

(10,669)

(6,625)(9,661)

761

2,2141,093

(U.S.$ thousands)

1,327

420,075

-

2,290

35,963

(9,720)

(48,785)

(35,888)

(2,065)

(1,244)

218

(61,005)

(3,840)

999

93,582

1,788

(2,424)

-

(330)

(7,938)(9,458)

24,353

(1,625)

251,508

-

3,461245

3,848

(1,040)

(60,863)

(164)

-

227,155

(68,626)32,346

(April 1, 2004 - March 31, 2005)

FY2005

(April 1, 2003 -March 31, 2004)

493,514

FY2004

42,101

50,726

(221)

-

-

23,542

16,710

874,598

(570,140)

2,519

(37,647)

(366)1,523

9,336 4,299

(3)

44,948

113,820

(44,471)

52,806

(5,220)

(7,343)

1,363

(Yen millions) (Yen millions)

(1,799) (16,813) (567)

1,190

142

11,121

48,613 42,863

2,717

3,665 34,252 762

9,285

454,327

16

Consolidated

I-8) Summary of Significant Accounting Policies

Marketable Securities

Inventories

Depreciation

Income Taxes

Derivatives Financial Instruments

Goodwill and Other Intangible Assets

Retirement and Severance Benefits

Term

ItemNet incomeOther comprehensive income (loss), net of tax:

Foreign currency translation adjustmentsMinimum pension liability adjustmentsNet unrealized gains (losses) on securities

Total comprehensive income


(7) SFAS No. 87, "Employers' Accounting for Pensions" is adopted. Gain and loss related to the transfer of thesubstitutional portion of its Employees' Pension Fund to the government was accounted for in accordance withthe Emerging Issues Task Force issue 03-2 ("EITF 03-2"), "Accounting for the Transfer to the JapaneseGovernment of the Substitutional Portion of Employee Pension Fund Liabilities".

(5) SFAS No.133, "Accounting for Derivative Instruments and Hedging Activities" and SFAS No.138,"Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASBStatement No.133" are adopted.

(6) SFAS No.141, "Business Combinations" and SFAS No.142, "Goodwill and Other Intangible Assets" areadopted.

(2)

(4) Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities arerecognized for the estimated future tax consequences attributable to differences between the financialstatement carrying amounts of existing assets and liabilities and their respective tax base and operating lossand tax credit carryforwards.

Inventories are stated at the lower of cost or market. Cost is determined principally by the average method.

(3) Depreciation of property, plant and equipment is principally computed by the declining-balance method forassets located in Japan and certain foreign subsidiaries, and by the straight-line method for assets of otherforeign subsidiaries based on estimated useful lives.

1. The consolidated financial statements are prepared in conformity with the U.S. GAAP.

(1) Statement of Financial Accounting Standards ("SFAS") No.115, "Accounting for Certain Investments in Debtand Equity Securities" is adopted.

5,636

44,948

(April 1, 2004 - March 31, 2005) (April 1,2003 - March 31,2004)


(26,287)

420,075

52,672

42,101

2. As of March 31,2005, TDK had 71 subsidiaries (18 in Japan and 53 overseas). TDK also had 6 affiliates (4 inJapan and 2 overseas) whose financial statements are accounted for by the equity method.

3. Comprehensive income comprises net income and other comprehensive income. Other comprehensiveincome includes changes in foreign currency translation adjustments, minimum pension liability adjustments andnet unrealized gains (losses) on securities. The net income, other comprehensive income (loss), net of tax andtotal comprehensive income for the years ended March 31, 2005 and 2004 were as follows;

FY2005 FY2004

83,678 782,037 30,538

32,941 307,860 14,186153 1,430 538

17

Consolidated

I-9) Segment Information

1. Industry segment informationTerm

Product % % Change(%)

Electronic materials and componentsNet sales

Unaffiliated customersIntersegment

Operating expensesOperating income

Recording media & systemsNet sales


Operating expensesOperating income (loss)

TOTALNet sales


Operating expensesOperating income


2. Geographic segment informationTerm

Region % % Change(%)

Notes:1. Net sales in each geographic area are based on the location of TDK entities where the sales are generated.2. U.S.$1=Yen 107

3. Sales by regionTerm

Region % % Change(%)

AmericasEuropeAsia and othersOverseas sales totalJapanNet sales

Notes:1. Overseas sales are based on the location of the customers.2. U.S.$1=Yen 107

The following industry and geographic segment information are required by the Japanese Securities Exchange Law.

26,38287,594

246,561818,636

59,830

(April 1, 2004 - March 31, 2005)(Yen millions) (U.S.$ thousands)

59,830

71,682(5,125)

400,86633,551

241,782474

(Yen millions)

7.8

6,148,159

51,364

11.3

-0.1100.0

8,538

4,985

(115)

FY2005

120,329(7,690)

657,853

-

(71,869)

6,148,159

5,095,4585,095,458

-

657,853

5,589,000559,159

545,214545,214

- 477,694

67,520

112,639112,639

-

1,052,7011,052,701

- 1,124,570

(5,485)

2,0612,061

-

(23,361)(23,361)

- (17,876)

25,42225,422

-

(Yen millions)

236,383

655,792

100.0 100.0

100.0 100.04.9

100,971

4,430 (190)5,399

6642,0613,320

100.0 6,148,159

(April 1, 2004 - March 31, 2005)

184,025657,853

324,313473,828

77,81371,702

727,224

(April 1, 2004 - March 31, 2005)

9.1

669,925(47,897)

3,746,411

(U.S.$ thousands)

313,5612,259,645

657,853

5,496

Japan

(Yen millions)

FY2005

-7.1

100.0

100.0

100.0

3,172,832339,493

Total

- 598,023

100.0

100.0

- 106.8

-6.8

4,464,430631,028

6,148,159

87.612.4

100.0

(April 1, 2003 - March 31, 2004)

56,510

136,000

138,205

90.99.1

FY2005

100.0

Intersegmenteliminations

100.0

8.4

Americas

Europe

Asia andothers

6.3

Net sales Operating income

28.0

10.9

72.0

(U.S.$ thousands)

1,719,860

670,112

4,428,2993,030,963

11.8

49.3

(April 1, 2003 - March 31, 2004)(Yen millions)

FY2004

42,912

80,641

380,781

(Yen millions)

100.02.6

329,782

519,792

-

58,715

136,000

519,792

461,077

655,792

599,282

(2,205)

655,792

-

100.0

88.7

101.6

91.48.6

-1.6

11.3

Change

16,6178,805

4.94.9

3.6-

15.0

-17.2-17.2

- -12.9

-248.8

0.30.3

- -0.25.9

Change

(1,259)3,320

(Yen millions)

(8,959)(5,010)20,085

9,71117,844

(13,377)511

100.0

2.9209.0-13.210.3

-11.1-

5.3-21.8(9,361)

80,71013.512.3

0.35.9

Change

56,510

(April 1, 2003 - March 31, 2004)

559,159 8.6

100.0

317,725487,169168,623655,792 2,061

-12.3-11.2

2.1-2.79.10.3

(10,921)(9,008)6,588

Net sales Operating income (loss)

(13,341)15,402

(Yen millions)

48.574.325.7

(Yen millions)

88,734

FY2004

FY2004


Net sales Operating income Net sales Operating income (loss)


18

Consolidated

I-10) Fair Value of SecuritiesGross Gross

Cost Unrealized Unrealized Fair(Yen millions) Holding Gains Holding Losses Value

As of March 31, 2005Equity securitiesDebt securities

TotalAs of March 31, 2004

Equity securitiesDebt securities

Total

Gross GrossU.S.$1=Yen 107 Cost Unrealized Unrealized Fair(U.S.$ thousands) Holding Gains Holding Losses Value

As of March 31, 2005Equity securitiesDebt securities

Total

I-11) Fair Value of DerivativesContract Carrying Estimated Fair

(Yen millions) Amount Amount ValueAs of March 31, 2005

Forward foreign exchange contractsCurrency option contractsCurrency swap agreements for loans toits subsidiaries

As of March 31, 2004Forward foreign exchange contractsCurrency option contractsCurrency swap agreements for loans toits subsidiaries

Contract Carrying Estimated Fair(U.S.$ thousands) U.S.$1=Yen 107 Amount Amount Value

As of March 31, 2005Forward foreign exchange contractsCurrency option contractsCurrency swap agreements for loans toits subsidiaries

230,290 (3,421) (3,421)

24,641 (366) (366)

40,645 (822) (822)

396 396

1,054 - 7,005- - 1,698

1,054 -

1,1012,782

5,9511,6987,649

3,883

71,486

55,61715,869

1,054-

1,054 4,937

- - 15,86965,4679,850 -

9,850 - 81,336

8,703

- 3,836- 1,101-

(88) (88)4,349

11,067 (312) (312)

18,63816,340 91 91

12,605 252 252

103,430 (2,916) (2,916)

19

Consolidated

I-12) Conditions of Production and Orders

1. Production resultsTerm

ProductElectronic materials



& systemsTotal

Notes :1. Monetary amounts are calculated using sales prices.2. U.S.$1=Yen 107

2.Orders conditions

Electronic materialsand components

Electronic materialsand components

Notes :1. For products other than electronic materials and components, forecast production is used.2. U.S.$1=Yen 107

-20.5

7.81.5

5.2

27.2

6.9

177,860

2,197,598

27,145

8,4213,361

11,294

518,567

107,579231,782

4,069

4,038 0.6

89,551

19,031

235,143116,000175,538

(23,107)

1,084,112

(Yen millions) (U.S.$ thousands) (Yen millions) Change(%)(Yen millions)

FY2004FY2005 Change(April 1, 2003 - March 31, 2004)(April 1, 2004 - March 31, 2005)

14,962

112,658

631,225

545,712 5,100,112

1,640,542 164,244

635,263 5,937,037

836,925

(Yen millions)Change(%)

503,485

Orders of FY2005(April 1, 2004 - March 31, 2005)

(Yen millions) (U.S.$ thousands)

Orders of FY2004(April 1, 2003 - March 31, 2004)

536,947

Change(%)(As of March 31, 2005) (As of March 31, 2004)(Yen millions) (U.S.$ thousands)

-16.7

(Yen millions)

45,462 424,879 54,582

5,018,196 6.6

Outstanding orders Outstanding orders

20

Consolidated

I-13) Supplementary Information (Consolidated)

Exchange rates used for conversion

Term April 1, 2004 - April 1, 2003 -March 31, 2005 March 31, 2004

Item US$=Yen Euro=Yen US$=Yen Euro=YenAverage rate for the periodThe end of the period

Consolidated

Term April 1, 2004 - April 1, 2003 -March 31, 2005 March 31, 2004 Change

(%)ItemCapital expendituresDepreciation and amortizationResearch and developmentResult of financial incomeNumber of employees(as at the end of the period)Ratio of overseas production % %

Overseas sales by division


(%)Product

Electronic materials and componentsElectronic materialsElectronic devicesRecording devicesSemiconductors & others

Recording media & systemsOverseas sales

70,199 10.7186,768 28.4

59.6 383,699 58.5

-

Ratio tosales (%)

14.4-4.3

-20.95,743

103,470

61,373195,137

9.4

-2.7

45.229.70.9

15.874.3487,169

8,338 1.381,879 12.4

473,828 72.0

138.87113.19 132.65

128.88

126,644 19.2

1,368

37,115

36,348 5.5

59.0

391,949

107.55107.39 105.69

135.17

18.5

7.7

121,446

36,804

32,948 5.0866

58.6

4.3

37.24.1

10.358.0

2.2

52,806 8.0 50,72661,005 - 44,471

Amount(Yen millions)

Ratio tosales (%)

Amount(Yen millions)

Amount Ratio tosales (%)

Amount Ratio tosales (%)(Yen millions) (Yen millions)

21

Non-Consolidated

II. Non-Consolidated

II-1) Summary

Non-Consolidated results (April 1, 2004 - March 31, 2005)

Term

ItemNet salesOperating incomeCurrent incomeNet incomePer common share :

Net income / BasicNet income / Diluted

Dividends per shareNotes:

1. Any portion less than Yen one million is disregarded, the same being applicable hereinafter. U.S.$1=Yen 107(U.S. dollar translation is added herein solely for convenience of readers outside Japan.)2. The figures for net income per common share are calculated based upon the weighted average number of shares of common stock (the total outstanding number).

(Sales breakdown)Term

ProductElectronic materials



& systemsTotal salesOverseas sales


-3.0

8.2-10.9

%

5.1

3,116 16.6

6.4

271,043

14.2

13,756

25.7 6,64012.7 (4,399)

8,401

(1,354)

5.9

819,962 81,096

407,962

18,793

45,006

204,757

334,841 40,227

43,652

86.7

6.7

13.3

21,909

35,828 10.987,736 26.7

139,326

3.9

197.3786.3

392.8

Change(%)

100.0 12,402 3.9193,241 58.8 1,805,990 182,928 57.9 10,313 5.6328,452 100.0 3,069,644 316,050

42.4 1,302,112 130,925 41.5

Change(April 1, 2004 - March 31, 2005) (April 1, 2003 - March 31, 2004)

(Yen millions) (U.S.$ thousands) (Yen millions) (Yen millions) Change(%)

U.S.$ 0.37 Yen 30.00

284,799 2,661,672 85.8

%

FY2005 FY2004

Yen 40.00

1.4 35,05530,550 9.339,513 12.0 369,280 4,458

285,514 10,277

100.0 12,4020.6 6,8973.3 20,273

8,653 2.6 80,869 1,756328,452 100.0 3,069,644 316,050

(Yen millions) (U.S.$ thousands) (Yen millions) (Yen millions)%%

FY2005 FY2004 Change(April 1, 2004 - March 31, 2005) (April 1, 2003 - March 31, 2004)

Yen 297.93 U.S.$ 2.78 Yen 32.87Yen 32.86Yen 297.74 U.S.$ 2.78

22

Non-Consolidated

II-2) Statements of income (Non-Consolidated)

Term(April 1, 2003 - Change

March 31, 2004)Item

Net salesCost of sales

Gross profitSelling, general and administrative expenses

Operating income

Other income (deductions):Interest and dividend incomeTechnology commissionInterest expenseForeign exchange lossOther-net

Total other income (deductions)

Current income

Extraordinary profit:

OthersExtraordinary loss

Income before income taxes

Income taxes

Net income

Note:U.S.$1=Yen 107

1,123

FY2005(April 1, 2004 - March 31, 2005)

FY2004

(U.S.$ thousands) (Yen millions) (Yen millions)(Yen millions)

2.6

658,355

8,653

12,898

20,330

(1,334) -0.4

59,843 18.2

18.6

7,784(26)

(655) (6,121) (2,471)(42)

70,44461,791 18.8 577,485

1,756 0.6

3,369

60,67758,921

(134)21,896 204,635 8,521

9896.7

-2.1

13,3752.7 157.0

-79.25,076

20,273 197.3

(12,467) (6,410)

35,055 786.3

54,160 953.0

19,106 -

559,280 5,683

258,007 78.6 2,411,280328,452 100.0

80,869

120,542

21.4

30,550 9.3 285,514

9,242

(392)8,706 81,364

10,277 3.3

1.8

6.2 190,000 0.41,224

1.439,513 12.0 369,280 4,458

392.82,870

12,402 3.9

9,767 16.11.02,635

Change(%)

922(16)

1,816

6,897

9,529

9.2

% %

4.9

3,069,644 316,050 100.0255,372 80.8

19.2

3,766 1,816 (1,413)

282,476

-77.8

Gain on transfer of substitutional portionof employee pension fund liabilities

0.1 0.6

- 30,225 -30,225

403

23

Non-Consolidated

II-3) Balance sheets (Non-Consolidated)

TermItem

Current assetsCashMarketable securitiesTrade receivablesInventoriesOthers

Noncurrent assetsInvestments in securitiesInvestments in affiliatesNet property, plant

and equipmentOthers

TOTAL

TermItem

Current liabilitiesTrade payables Accrued expensesIncome taxes payablesOthers

Noncurrent liabilitiesRetirement and

severance benefitsDirectors' retirement

allowance

Common stockAdditional paid-in capitalLegal reserveRetained earnings

Net unrealized gainson other securities

Treasury stock

TOTAL

Note:U.S.$1=Yen 107

(Yen millions)

15,398

12,734

6,954

4,938626

114,294

264,385

%

10,299767,186212,728

As of March 31, 2005

50.5

25,697 82,089

%

2,544,859

(U.S.$ thousands)(Yen millions)

Change

5,432


261,758 10,542

%(Yen millions) (Yen millions)

ASSETS

76,868

64,882 59,450606,373272,300

82,46422,762

718,392

240,158

8,140108,575

76,074

(1,812)

266,576

24,574


79,870

1,014,719 107,949

1,133,158

49.5 2,491,3643,202

714,355 13.8

538,877 100.0 526,1435,036,233 100.0


103,102 12,831 (1,799)

38,938

LIABILITIES AND STOCKHOLDERS' EQUITY

37,458 350,074 38,704 (1,246)72,832

184,850 19,014 7658,166 76,317 2,282 5,884

2,364 303 (50)

14,706 137,439 37,128 (22,422)

854,168 110,264 21.0 (18,868)

- 32,641 305,056 32,641

8,160 - 59,256 553,794 59,256 - 8,160

31,332353,006 3,299,121 321,674

1,374

(7,443) (69,560) (6,338) (1,105)

100.0 12,734447,480 83.0 4,182,056 415,878 79.0 31,602538,877 100.0 5,036,233 526,143

28,611

1,858 17,364

76,261

139,803 37,432

267,392

484

91,396

14,959 2.8

%

19,779

11,032

121,248


Total liabilities


76,436 14.2

17.0

253

(22,473)7.2

(10,327)

49.8

Change

50.2 2,191

(375)

3,604

(3,002)

24

Non-Consolidated

25

II-4) Management Changes 1. Candidate for election to the board of directors Seiji Enami (Finance & Accounting Dept.) 2. Retiring director Mitsuaki Konno (Management Review & Support Dept.)

Non-Consolidated

II-5) Supplementary Information (Non-Consolidated)

Ratio of results on a Consolidated basis to results on a Non-Consolidated basis

Ratio of FY2005 Ratio of FY2004Net salesOperating incomeIncome before income taxesNet income

Exchange rates used for conversion

Term April 1, 2004 - April 1, 2003 -March 31, 2005 March 31, 2004

Item US$=Yen Euro=Yen US$=Yen Euro=YenAverage rate for the periodThe end of the period

Non-Consolidated


(%)ItemCapital expendituresDepreciation and amortizationResearch and developmentResult of financial incomeNumber of employees(as at the end of the period)

Amount Ratio tosales (%)

Amount Ratio tosales (%)(Yen millions) (Yen millions)

90.016.96.9

- 7.97.8

282.03,373

6,113

107.55107.39 105.69

26,456

135.17

8.1

37,288 - 29,344 8.9

2.06.9

12,884

6,024

138.87113.19 132.65

128.88

19,62725,10924,759

2.01.1

2.132.2

5.49.4

26

tdk corporation · in april 2004, tdk launched an initiativeaimed at generating new growth with the...

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